On January 1, 2012, Georgi Company was authorized to issue 10,000 shares of $2 par common stock and 5,000 shares of $5 preferred stock. Given this information, if Georgi Company issued 2,000 shares of preferred stock for $20 per share on January 31, 2012, the entry to record the issuance of the stock would include a

Question

Quizplus · Accepted Answer

The entry to record the issuance of preferred stock includes a debit to cash for the amount received, which is $40,000 (2,000 x $20). Thus, the correct answer is D, which is the only option that includes a debit to cash of $40,000. Option A is incorrect because it includes an incorrect amount. Option B is also incorrect because it refers to the excess amount paid above par value, which is not given in the question. Option C is incorrect because it credits the preferred stock account with the total amount authorized, which is not accurate since only 2,000 shares were issued.

On January 1, 2012, Georgi Company Was Authorized to Issue